Question

Weismann Co. issued 11-year bonds a year ago at a coupon rate of 12 percent. The...

Weismann Co. issued 11-year bonds a year ago at a coupon rate of 12 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 11 percent, what is the current bond price?

Homework Answers

Answer #1

Value of Bond =

Where r is the discounting rate of a compounding period i.e. 11%/2 = 5.5% _ _ (Semi Annual )

And n is the no of Compounding periods 10 years * 2 = 20 periods_ _ (Semi Annual )

Coupon 12%/2 = 6%

=

= 717.02294916 + 342.72896327

= $ 1059.75  

Value of Bond is $ 1059.75

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